Axa General Insurance Ltd v Gottlieb

JurisdictionEngland & Wales
JudgeLord Justice Mance,Lord Justice Keene,Lord Justice Pill
Judgment Date11 February 2005
Neutral Citation[2005] EWCA Civ 112
Docket NumberCase No: A2/2004/1090
CourtCourt of Appeal (Civil Division)
Date11 February 2005
Between
Axa General Insurance Limited
Respondent
and
Clara Gottlieb and Joseph Meyer Gottlieb
Appellants

[2005] EWCA Civ 112

Before

Lord Justice Pill

Lord Justice Mance and

Lord Justice Keene

Case No: A2/2004/1090

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT

QUEEN'S BENCH DIVISION

Judge Bowers

Julian Field (instructed by Lawrence Graham) for the Respondent

Isaac Jacob (instructed by GSC Solicitors) for the Appellants

Lord Justice Mance

Introduction

1

The appellants, Mr and Mrs Gottlieb, are householders at 99 Darenth Road, London N16, where they were for many years insured under a buildings policy with the respondents, Axa General Insurance Limited ("Axa") renewable on 31 st August. During the policy year with effect from 31 st August 1993 four claims arose in respect of which dates and references were assigned, and payments were later made for repairs and alternative accommodation ("AA"), as follows:

The payments for claims (3) and (4) resolved those two claims completely.

Claim

Date/Ref.

Nature of claim

Payments made by insurers before any fraud (i.e. by late September/very early October 1999)

Payments made by insurers after fraud

1

1/12/93 J6/12/40167

dry rot damage after escape of water

Repairs: £30,059.99 (including £5,000 "incidentals") plus AA: £4,500 = £34,559.99

Repairs: £9,406.25 plus AA: £16,074.25 = £25,480.25. (These repair and AA figures reflect a re-allocation by insurers to AA of the £5,000 paid prior to late September as "incidentals")

2

1/ 2/1994 J6/12/45335

damage by escape of water in first bathroom.

£14,250

NIL

3

July 1994

storm damage

£1,000

NIL

4

3/ 5/1994 J6/12/40157

damage by escape of water in second bathroom

£13,150

NIL

2

These proceedings were brought by Axa to recover all the above payments, on the basis that Mrs Gottlieb, acting for herself and her husband, acted fraudulently in two separate respects in the pursuit of two of the claims: firstly, in pursuing a claim for alternative accommodation allegedly supplied by their builder, a Mr Galvin, as part of claim (1) and, secondly, in submitting a forged document purporting to be an electrician's invoice from a Mr Reid for £1,200 in support of claim (2). By judgment and order dated 7 th May 2004, HHJ Bowers held that Mrs Gottlieb had been fraudulent in the first respect from late September or very early October 1999, and in the second respect from 20 th June 2000 when she knowingly presented the forged document for settlement by insurers under claim (2). He held that Axa were entitled as a result to recover from Mr and Mrs Gottlieb all sums paid – whether prior or subsequent to Mrs Gottlieb's fraud—on claims (1) and (2), but he rejected Axa's claim that they were as a result also entitled to recover the sums (totalling £14,150) that they had paid on claims (3) and (4) which were not the subject of any fraud. Mr and Mrs Gottlieb appeal the judge's decision on the first point, on the ground that he should have held that a fraudulent claim has no effect on interim payments made, prior to any fraud, in respect of genuine loss, so that their liability to repay should be limited to the £25,480.25 shown in the last row relating to claim 1 in the above table. In response, Axa, while making clear that they would not have appealed had the Gottliebs not done so, appeal the judge's decision on the second point, submitting that he should have held that the monies paid prior to the fraud in respect of genuine losses suffered by the Gottliebs on claims (3) and (4) were recoverable. In each case HHJ Bowers gave permission for the appeal.

Application for an extension of time to seek permission to appeal the fraud findings

3

These appeals were set down for a one-day hearing on 17 th or 18 th January 2005. By further notice dated 11 th January 2005, Mr and Mrs Gottlieb then sought permission to appeal against the judge's findings of fraud and for an extension of time for such application. The only ground given for an extension was:

"because (i) the finding of fraud against the Defendants who are very religious people of otherwise impeccable character is most serious (ii) there has been a change of solicitors and counsel (at the beginning of January 2005) who have reconsidered the findings of the learned judge and consider that an appeal accepting the judge's primary findings but challenging the inferences drawn (as to which there was no or no sufficient evidence) has a real prospect of success."

In support, Mr Shapiro, a legal executive with the Gottliebs' current solicitors Messrs GSC, recorded that his firm's instructions had been received on 22 nd December 2004, that very shortly before that date Messrs. Hassans of Gibraltar had obtained a preliminary view from counsel, Mr Jacob, who now appears before us on Messrs GSC's instructions and that prior to that the solicitors on the record had been Messrs Ingram Winter Green who acted at the trial. As to the previous history he said simply:

"7. I believe that the view was taken by previous advisers of the Defendants that there was no real prospect of success in appealing the findings of fraud against the Defendants.

8. I understand that counsel presently instructed considers that there is a real prospect of success on the basis that the inferences drawn by the judge from primary fact are open to challenge.

9. The matter is obviously of the gravest concern from the point of view of the Defendants' reputations."

4

We heard the application for an extension of time, presented on behalf of the Gottliebs by Mr Jacob, and after retiring and considering the matter we announced our conclusion that it should be dismissed, saying that our reasons would appear in a written judgment dealing also with the appeals for which permission has been given. After the mid-day adjournment, Mr Jacob informed us that Mrs Gottlieb, who was in court throughout the appeal, wished to address us herself on the application for an extension of time to seek permission to appeal against the judge's findings of fraud. The matter having been fully argued by counsel and disposed of, we refused that application. I now therefore give my reasons for refusing the extension of time.

5

In considering a late application of this nature, the court is bound to take into account "all the circumstances", including any of the kind specifically indicated in CPR3.9. The interests of the administration of justice are ill served by a late application for as long an extension as that presently sought. If there were a good explanation for the lateness and an apparently good case on the merits, an argument that the interests of justice in enabling parties to have an opportunity to clear their names could counter-balance this consideration. For the reasons to which I will come this is not however the case.

6

The application for an extension of time has not been made promptly. It is no answer that Mr and Mrs Gottlieb have in late 2004 or early 2005 decided to instruct solicitors and counsel, who consider that an appeal would have a real prospect of success. There is no explanation why they did not, immediately after the judgment and after trial solicitors' adverse advice on the prospects of an appeal, go to other solicitors and counsel for a second view. When we put this to Mr Jacob, he said that they had gone to yet another firm in October 2004, who had also given unfavourable advice. That still does not explain the delay from 7 th May to October 2004. The seriousness of the judge's findings of fact was clear from the outset, and, if it was believed that Mrs Gottlieb was innocent of fraud, both Mr and Mrs Gottlieb must have felt impelled to take every possible step to redress the situation from the outset. Their failure to do so is certainly not shown to have been unintentional. At all events they must have known that there is a time limit for any application to appeal and that it was incumbent on them to act speedily if they wished to investigate and pursue the possibility of an appeal, despite the unfavourable advice received from their trial lawyers. There is no good explanation for their failure to do so, and nothing to show that the failure was other than their own fault. The late notice itself contravenes CPR52.5.2 in failing to state "the reason for the delay and the steps taken prior to the application being made". As a minor point, it also appears that the appeal bundle and authorities for the existing appeals were late.

7

As a result of the failure to apply for permission to appeal or seek an extension of time at an early stage, Axa has been entitled to treat the findings of fraud as final for over seven months, and to assume that the existing appeals would resolve the other outstanding matters in January 2005. The grant of relief would introduce new, factual issues, which, if raised at all, ought normally to be decided before the existing appeals. Axa's trial counsel has left the bar, and Axa would seek and on the face of it be entitled to time to consider the new, factual issues, so that, if an appeal were allowed on them, there would either have to be an adjournment of all aspects under appeal to achieve the single hearing that would be the normal rule in such circumstances, or two appeal hearings taking place in the reverse order to the normal.

8

Mr and Mrs Gottlieb emphasise through Mr Jacob that a refusal of relief would preclude them ever challenging on appeal very serious findings against them. Brooke LJ said in Sayers v. Clarke Walker [2002] EWCA Civ 645; [2002] 1 WLR 3095, para. 34, that

"[I]n...

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